We may be able to immediately see the wave structure in the charts, but it wasnt always the case. I was just suggesting a technique that I found personally found useful when trying to get my head around the use of muliple timeframes for trend trading. It may help some to see the wood for the tree’s.
I may not agree with much of the material, or how its presented, but that doesnt stop me from trying to help someone by giving an alternative view of the same concept.
You’ll notice I’m also reccommending the same book as Tymen, Phillipe Cahen is an exceptional gifted technical analyst, and one of the few authors writing in this field offering information of genuine value.
simbafx…thanks for the reference to the Zig-zag indicator. I’d never used it (didn’t know about it) but it looks like a handy tool. Sorry for posting this “to all.” I don’t know how to send a private message.
This book was on my list of achnowledgements in my opening posts of this thread.
I have carefully researched the material in the book and used some of the ideas here.
The original version in english is out of print now, but the publisher will print and bind copies on request.
There is no problem getting the book here in Australia.
It was simply on the shelves and easy to order if it was not on the shelves.
It is a small, expensive book but I do recommend it for reading.
It is not a hard and fast rule to select a 1 hour chart - you could also select a 2 hour or 4 hour chart.
But selecting a 5 minute chart is ridiculous!!
Using this chart as a timing chart we get a much better entry at 89.99.
The difference between this entry and the daily chart entry of 90.69 is 70 pips.
[B][U]Question[/U][/B] - If a shorter term timing chart gives us earlier and better entries than why not go all the way and use a 5 minute timing chart?
[B][U]Answer [/U][/B]- We would get a million and one whipsaws and we would have no idea where the true entry is.
[B]The longer timeframes give us better direction but later entries.
The shorter timeframes give us uncertain direction but earlier entries.[/B]
The construction of the zig zag is fully outlined in Technical Analysis from A to Z by Steven B Achelis.
He warns not to construct a trading system based on this indicator since it has only perfect hindsight but the future is a big question mark.
I am completely disappointed,
At the beginning we were searching for the definition of the end of the trend!
Now we have set the rule: to exit at close price of second retracement candle.
In my understanding it is incorrect, because the third candle can be a candle in opposite direction of the retracement candles. We can see the examples of such situations in the posts № 251, 291, 294.
So what we come from?
We have now achieved a much better grasp of getting efficiency into the trend trade.
We have covered a lot of ground in a short time!!
[B]So far we enter on the crossover of a MMACD and exit on the BB.[/B]
The MMACD crossover on a timing chart is relatively easy.
Determining the direction of trade on a long term trend chart is not so difficult.
But the best exit on a BB is another matter altogether.
We now need to look much more closely at the matter of BB exits and find out what is the best way to achieve such an exit for the best possible profit.
This is a new topic and promises to be a very interesting one.
There is going to be much discussion and debate here!!
It is late here and I will start this new topic… tommorow.
